Target (TGT) forecast a surprise drop in holiday-quarter sales on Wednesday, blaming surging inflation and "dramatic changes" in consumer spending for a drop in demand for everything from toys to electronics. Shares of the big-box retailer fell more than 17% in early trading after it also said an early start to holiday season promotions and shoppers holding back for steeper discounts cut its third-quarter profit by half.
Target’s net income in the third quarter fell by about half – to $712 million, or $1.54 a share, from $1.49 billion, or $3.04 per share, a year earlier. Revenue rose 3.4% to $26.52 billion from $25.65 billion a year earlier. The retailer made progress in clearing through much of its excess merchandise. Its inventory was up about 14% year over year compared with 36% in the second quarter and 43% in the first quarter.